What is a cost-benefit analysis (CBA) in health economics?

• A. An evaluation that converts costs and benefits into monetary units to determine net monetary benefit or benefit-cost ratio.
• B. An evaluation that compares outcomes without costs.
• C. An evaluation that uses QALYs as outcomes.
• D. An evaluation that only considers indirect costs.

Answer: (A)

Cost-benefit analysis in health economics converts both costs and benefits into monetary terms so they can be compared on a single scale. By monetizing the health gains and the resources used, you can calculate the net monetary benefit (total monetized benefits minus total costs) or the benefit-cost ratio (total benefits divided by total costs). If the net benefit is positive or the ratio exceeds one, the option is economically favorable. This approach often relies on willingness-to-pay for health improvements and incorporates time discounting, with sensitivity analyses to account for uncertainty since monetizing health outcomes can be controversial and imprecise.

Other approaches don’t monetize all effects: some compare outcomes without assigning a monetary value to costs, or focus on health outcomes like QALYs without turning them into dollars, or limit the analysis to indirect costs only.